Global Journal of Management and Business Studies.

ISSN 2248-9878 Volume 3, Number 3 (2013), pp. 341-346

Research India Publications
http://www.ripublication.com/gjmbs.htm

Comparative Study of the Challenges Faced by PSU Banks

and Urban Cooperative Banks and Strategies to Overcome
with Special Reference to Mangalore City
N. Babitha Thimmaiah1, Jnaneshwar Pai Maroor2 and Shainy V.P 3
1

Associate Professor, Vidyavardhaka College of Engineering, Mysore.

Assistant Professor & Ph.D Research Scholar, Justice K.S Hegde Institute of
Management, NMAMIT, Nitte.
3
Assistant Professor, Mahesh College of Management, Mangalore.

Abstract
Banks in India have undergone various ups and downs in our country.
We can divide development phases of banks in four phases viz. prior to
nationalization of banks in 1969, second phase after nationalization
when massive expansion of rural branches and lending to priority
sector have taken place, third phase i.e. after Narsimham Committee
report on Bank Reforms, and now fourth phase i.e. in last decade i.e.
first decade of 21st century. Technology and human capital in banking
industry at its peak level to give service to human society. Net banking,
core banking, e payment, e statement, online share trading, debit and
credit card, door service etc. has revolutionized banking industry.
However are all involved in this revolutionary move? Present research
paper highlights the problems faced by bankers in dealing with
customers in the light of ever-increasing and changing expectations,
competitions from private sector and other banks, tapping untapped
25% rural citizens, service quality problem etc.. This paper highlights
some of major problems faced by banks today, strategies they have
formulated and implemented and innovative suggestions to overcome
problems by considering that bank is a service industry component.
Keywords: Banking, Public sector, Urban C-operative bank.
Nationalisation.

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1. Introduction
Banking industry in India has undergone many ups & downs. This journey can be
viewed in four phases viz. Before Nationalization (1969); From 1969-1990; After
Narsimham committee & reforms; From beginning of this century till date. Indian
society has witnessed tyranny of private money lenders, crunch for funds for private
sector to today's environment where due to Government & RBI policies, conducive for
agricultural & industrial development, every cross-sections of society is benefited out
of this. With the advent of Information technology & computer, network technology
there is revolution taken place in banking industry. Core banking, net-banking, eservice (tax & other payments), online share trading etc.

2. Research Problem
1.
2.
3.
4.

To find out recent trends in marketing of bank services.

To know the problems faced by bankers in marketing
To know the customer problems in getting access to bank services
To suggest ways to overcome problems

3. Research Methodology
Methods of data collection 1. Primary: Observation, Interview of branch managers &
officers 2. Secondary: a. Books, Journals, Websites
3.1 Sample
1. Two public sector banks
2. Two Urban co-operative banks
Analysis: Qualitative data Analysis.

4. Data Analysis & Interpretation

It is observed that banks are doing their best to give quality service to customers as
given below:
Customer relations are maintained by Branch Managers & Officers. However,
special customer relation Executives/Officers is not there.
Banks having problem of inconsistency in the quality of service. This is
because human beings can't behave with same consistency.
Staff problem:-In public sector banks' employees feel secured & that is why
they least bothered about giving satisfaction & delight to customers.
Service Culture is not developed in the banks.
Queuing Problems:-Imbalance in the Demand & Supply gap. First 10 days in a
month-heavy rush at counter & other days vacant or very less work.

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Less staff-over burden & stress:-Banks have given voluntary Retirement

Scheme, so staff is reduced. Staff which is now working in the bank is
overburdened. New staff is being selected at slower pace.
Technical problems: System failure is one of the basic problems. So officers
and counter staff and sometimes manager has to face problems and there is
unnecessary wastage of time of customers.
Unawareness and fear about new services even including ATM.
Customers when they face problem like long queue, they shout and may create
misunderstanding in the minds of other customers who are there at that time.

Following are the basic causes of all these problems

Customers in the banks are finding inconsistency in the quality because bank
employees do not show consistency in their behavior.
Customer orientation is lacking in banks.
Employees' salary is not linked with customer satisfaction and it is offered to
all even they give quality or not.
Employees are overburdened because of excess time of bank hours. i.e. less
number of workmen and increasing number of account holders result into
extension of working hours up to 6 (business hours). Working conditions are
changed.
There is too much wide gap between what customers expect and what they get.
Inefficiency and dullness in the system
Average age in Public sector banks is around 35 to 40. It is higher than private
banks.
Market, i.e. customers in India are heterogenous. It means customers are from
different background-cultural, social, economic, educational etc. So there
expectations differ. Bankers have segmented the market but new way is
required to look at this issue. It is very much essential to have precision in
marketing in the light of competition from private banks.
Illiteracy and fear of bank environment is a major hurdle in attracting rural
masses. Similarly nature of job, migratory nature of people create problems in
bank services.
Competition from private banks, investment option from share and commodity
and gold and real estates.
4.1 Strategies to Overcome Problems Resistance of Customers/ Potential
Customers for Bank Services
Banking industry is in service industry. So service characteristics, as given below,
make Marketing of Banking Services difficult.
Perishability: Bank services are perishable. It means it cannot be stored like goods e.g.
if Bank employees are there, but account holders are less then business loss even for

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few hours cannot be restored. Similarly banks have funds are there to give as a loan,
but there are no applicants. So interest lost by the bank for a particular time period is a
loss forever. So Demand Management in Banks is more difficult than goods.
Intangibility: Banking services cannot be seen, touched or felt. So advertising or
promotion is very difficult. Marketers reach customers through Mouth publicity
through satisfied customers. It is the total resultant experience from bank which creates
an impact.
Heterogeneity: Bank services cannot be standardized like goods. Bank Marketing is
an interactive Marketing. i.e. customers will have constant interaction with the service
provider. So behind back of all services are employees i.e. human beings and they are
complex and volatile. So Quality Control and standardization of Banking Services are
challenges before Marketer.
Inseparability: Customers have to approach Bank to get services so he/she can be
affected by other customers. So how to protect the customer from other customers '
adverse effect is also a challenge.
Competition: Today Public Sector banks have thrown to competition to private sector
banks. Customers have now a wider choice because they are in the buyers market.
Illiteracy: 25% people of rural India have either fear about handling bank work. The
reasons being illiteracy, lack of knowledge about bank formalities, etc.

5. Conclusion
Indian Banking industry (Public sector) is facing two problems. 1. Inefficiency 2.
Competition from private players. These problems can be tackled effectively by giving
energy boosters like training and development, motivation of employees and by
creating super ordinate goals viz survival. So in banking services all concerned
decision makers have to take care of following and four pillars.
1. Target Market-Serve each segment uniquely
2. Understand real customer needs.
3. Integrated marketing-All bank employees are required to work as a team
towards customer satisfaction
4. Profit through customer satisfaction. Similarly Bankers should take care of 7 ps
of Bank Service Marketing Mix. Product and price: In the light of competition
from shares, stock, commodities, bankers should invest this in such a way that
competitive rate of return can be offered; Promotion: Use Mouth publicity,
Public relations, sponsorship; Place: Location decision should be taken
scientifically and in the light of competition; People: Selection of people and
retention strategies should be taken by following marketing orientation i.e. first

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satisfaction of employees and then they definitely satisfy customers; Process;

In banks line of visibility for customers is very important. so all bank work
seen by customers should be well planned and it should be without chaos.
Interactions with customers should be very effective; Physical evidence:
Environment and physical setting should be very attractive.

References

Datta, Rudra, K.P.M. Sundharam (2000), Indian Economy, Sultan Chand

Publications, New Delhi.
Hoffman, K. Douglas and John E.C. Bateson, Essentials of Services
Marketing: Concepts, Strategies, and Cases, Thomson South Western
Publications, 2nd edition.

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